Wrobel v. S.L. Pope & Associates

The opinion of the court was delivered by: Irma E. Gonzalez, Chief Judge United States District Court

TEMPORARY RESTRAINING ORDER

Presently before the Court is Andrew K. Wrobel's ("plaintiff") application for a temporary restraining order pursuant to Federal Rule of Civil Procedure 65(b). Plaintiff served its application on defendants through their counsel, James Jay Stoffel. However, Mr. Stoffel represents only S.L. Pope & Associates and Sam L. Pope, and has filed an opposition to plaintiff's application on behalf of these defendants. At oral argument, Mr. R. Keith McKellogg appeared for the first time on behalf of the remaining defendants.

The Ninth Circuit has prescribed the following equitable criteria for determining whether to grant injunctive relief:

(1) the likelihood of the moving party's success on the merits; (2) the possibility of irreparable injury to the moving party if relief is not granted; (3) the extent to which the balance of hardships favors the respective parties; and (4) in certain cases, whether the public interest will be advanced by granting the preliminary relief. The moving party must show either (1) a combination of probable success on the merits and the possibility of irreparable harm, or (2) the existence of serious questions going to the merits, the balance of hardships tipping sharply in its favor, and at least a fair chance of success on the merits. . . . [T]he required degree of irreparable harm increases as the probability of success decreases.

On the basis of plaintiff's application and supporting documentation, plaintiff will suffer irreparable injury if the Court does not grant the temporary restraining order. Defendants are scheduled to foreclose on plaintiff's property, including his residence of more than twenty years, on Thursday, August 16, 2007. Losing one's home through foreclosure is an irreparable injury.*fn1

See Cronkhite v. Kemp, 741 F. Supp. 822, 825 (E.D. Wash. 1989) (irreparable injury established where deed of trust contained no redemption period, and foreclosure would result in plaintiff losing home and all equity).

The remaining equitable factors likewise support the Court's entry of a temporary restraining order. The balance of hardships tips sharply in plaintiff's favor. For plaintiff to lose his house tomorrow would present a far greater hardship than postponing the foreclosure sale for a ten-day period to allow for an additional hearing and further briefing (especially since the defendants represented by Mr. McKellogg have not had an opportunity to oppose plaintiff's application in writing).

Because the balance of hardships so clearly points in plaintiff's direction, plaintiff is allowed to make a lesser showing on the merits. See Johnson v. Cal. State Bd. of Accountancy, 72 F.3d 1427, 1430 (9th Cir. 1995) (where balance of hardships tips sharply in plaintiff's favor, plaintiff need only show "fair chance of success on the merits"). Here, plaintiff has shown at least a "fair chance of success." Plaintiff's signature of the Forbearance and Release Agreement did not waive plaintiff's right to rescind the loan because of violations of the Truth-in-Lending Act (TILA), for the waiver provisions in that agreement did not comply with all the requirements of Regulation Z. See 12 C.F.R. § 226.15(e) (requiring dated written statement that describes the consumer's "bona fide personal financial emergency," specifically waives the right to rescind, and contains the consumer's signature).

Furthermore, plaintiff has a "fair chance of success" of establishing TILA violations because defendant creditors failed to provide plaintiff with certain "material disclosures" and required documents, including two notices of plaintiff's right to rescind the loan. See 15 U.S.C. §§ 1602(u) (defining material disclosures), 1639(a)(2) (listing further material disclosures); 12 C.F.R. § 226.32(c) (same); see also 15 U.S.C. § 1635(a) (requiring creditors to give consumer two copies of the notice of the right to rescind); 12 C.F.R. § 226.23(b)(1) (same). The failure to make material disclosures and tender required documents entitles plaintiff to rescind within three years of the loan's consummation. 15 U.S.C. § 1635(f); 12 C.F.R. §§ 226.15(a)(3), 226.23(a)(3).

For the time being, the Court finds that plaintiff's allegations on the merits are sufficient to grant the temporary restraining order. Nonetheless, before entering any preliminary injunction, the Court will request further briefing on the issue of what showing plaintiff must make (if any) of his ability to tender back the loan proceeds, in the event plaintiff proves he is entitled to rescission. See 12 C.F.R. § 226.23(d)(3) (requiring, as part of rescission, the consumer to tender back any money or property the creditor previously delivered to the consumer); Yamamoto v. Bank of New York, 329 F.3d 1167, 1169, 1173 (9th Cir. 2003); LaGrone v. Johnson, 534 F.2d 1360, 1362 (9th Cir. 1976); Palmer v. Wilson, 502 F.2d 860, 862 (9th Cir. 1974).

Public interest factors do not weigh in favor or against injunctive relief in this case. Pursuant to Federal Rule of Civil Procedure 65(c), the Court finds that plaintiff does not have to give any security at this time to postpone the foreclosure sale for the ten-day duration of this temporary restraining order. At this time, the Court finds sufficient equity in the property.

The Court hereby ORDERS:

(1) All defendants and their agents, assigns, employees, officers, attorneys, and representatives are enjoined and restrained from engaging in or performing any act to deprive plaintiff of ownership or possession of the real property located at 2241 Calle Tiara, La Jolla, California 92037 ("Property"), including but not limited to instituting, prosecuting or maintaining foreclosure or sale proceedings on the Property, from recording any deeds or mortgages regarding the Property or from otherwise taking any steps whatsoever to ...

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